The Impact of Institutional Shifts in Labour Market on the Dynamics of Income Inequality in China Over the Reform Period

The purpose of this work is to analyze the institutional shifts in labor market of China over the reform period as a factor of increasing income inequality.Regarding this, certain tasks of the work are posed as follows:• to analyze theoretical concepts of income inequality causes;• to investigate the dynamics of income inequality in China;• to determine factors of social stratification related to institutional reforms;• to carry out cluster analysis of administrative units of China;• to study government programs in China, that are aimed at lowering income inequality;• to assess the possibilities for exchange of experience between Russia and China to resolve the problem of income inequality.Transformation processes, that were conducted from the second half of the XX century in Russia and China, negatively affected the socio-economic structure of both countries. The study revealed serious aggravation of the problem of income inequality in China over the reform period. In this paper the author develops a regression model that reveals the significance of the main factors of inequality related to institutional changes in the labor market. These factors include privatization processes, internal migration and government spending on social services, particularly health and education. Income differentiation in China is also observed at the interregional level. According to the conducted cluster analysis groups of territorial administrative units of China were identified depending on the significance of the above mentioned factors and degree of inequality in these clusters was determined.Intrinsic similarities and differences between Russia and China open possibilities for exchange of experience between the two countries to mitigate the problem of income inequality. On the base of the overview of state measures undertaken by the governments of Russia and China in the period of reforms the author suggests that both countries can learn from each other developments of social infrastructure in order to form a well-functioning social sphere. China should borrow the Russian experience with state-provided social services, while Russia may consider the Chinese developments of insurance principles of social service provision. Russia could also pay attention to the Chinese experience in regional policy while shaping its own policy aimed at creating "growth poles" and developing of depressed regions of the country.